Hotel Online
News for the Hospitality Executive

.

advertisement
 

 Choice Hotels Reports 4th Qtr Net Income of $18.7 million, Compared
with $27.9 million a Year Earlier; System-wide RevPAR
Fell 7.7% in the Quarter
Brand Operating Statistics

.


SILVER SPRING, Md., Feb. 10, 2009 - Choice Hotels International, Inc. (NYSE: CHH) today reported the following highlights for fourth quarter and full year 2008:
  • Adjusted diluted earnings per share ("EPS") for full year 2008 were $1.78, compared to $1.74 for full year 2007. Diluted EPS were $1.60 for full year 2008 compared to $1.70 for 2007. 
  • Adjusted earnings before interest, taxes and depreciation ("Adjusted EBITDA") were $200.5 million for the year ended December 31, 2008, compared to $198.1 million for the same period of 2007. Operating income for full year 2008 was $174.6 million compared to $185.2 million for the same period of 2007. 
  • Adjusted EBITDA and adjusted EPS for the year ended December 31, 2008 excludes special items totaling $17.7 million and $0.18 diluted EPS, respectively related to $6.6 million of benefits resulting from the previously announced acceleration of the company's management succession plan, $3.5 million related to employee termination costs and $7.6 million related to an increase in reserves related to impaired notes receivable. Adjusted EBITDA and adjusted EPS for the year ended December 31, 2007 excludes special items totaling $4.3 million and $0.04 diluted EPS, respectively related to employee termination benefits. 
  • Adjusted EPS for the three months ended December 31, 2008 were $0.41, compared to $0.44 for the same period of 2007. Diluted EPS for the three months ended December 31, 2008 were $0.30 compared to $0.44 for the same period of 2007.
  • Adjusted EBITDA were $46.9 million for the quarter ended December 31, 2008, compared to $50.4 million for the same period of 2007. Operating income for the three months ended December 31, 2008 was $34.1 million compared to $48.1 million for the same period of 2007. 
  • Adjusted EBITDA and adjusted EPS for the three months ended December 31, 2008 excludes special items totaling $10.8 million and $0.11 diluted EPS, respectively related to $0.5 million of benefits resulting from the previously announced acceleration of the company's management succession plan, $2.7 million related to employee termination benefits and $7.6 million related to an increase in reserves related to impaired notes receivable. Adjusted EBITDA for the same period of 2007 excludes $0.1 million of employee termination benefits.
  • Domestic unit and room growth increased 6.1 percent and 5.6 percent, respectively, for full year 2008. 
  • Domestic system-wide revenue per available room (RevPAR) declined 1.8% for full year 2008 and 7.7% for fourth quarter 2008 compared to the same periods of 2007. The declines for full year and fourth quarter 2008 were primarily due to a 260 basis point and 500 basis point decline in occupancy, respectively, which was partially offset by increases in the average daily rate. 
  • The effective royalty rate increased 6 basis points to 4.20% for the full year 2008 compared to 4.14% for the same period of the prior year. 
  • Franchising revenues and total revenues increased 2% and 4%, respectively for full year 2008 compared to the same period in 2007. Franchising revenues declined 8% and total revenues declined 9% for fourth quarter 2008 compared to the same period in 2007. 
  • As a result of the current economic environment and credit market conditions, new domestic hotel franchise contracts for the three months ended December 31, 2008 declined 31% to 207 compared to 301 contracts executed in the same period of the prior year. Overall, new domestic hotel franchise contracts executed for full year 2008 declined 9% to 698 compared to 770 for full year 2007. 
  • The number of domestic hotels under construction, awaiting conversion or approved for development declined 2% from December 31, 2007 to 987 hotels representing 78,915 rooms; the worldwide pipeline increased 1% from December 31, 2007 to 1,108 hotels representing 89,105 rooms.
"While the last six months of 2008 represented a challenging time for the hotel industry, for the year, Choice Hotels was able to demonstrate strong domestic unit and room growth and increase its effective royalty rate, franchising revenues and total revenues," said Stephen P. Joyce, president and chief executive officer. "While we do not see any immediate economic turnaround or increased liquidity in the credit markets, Choice is uniquely positioned for long-term growth in this climate. With our proven, fee-based business model and financial strength, we have historically been able to perform well in a wide range of industry and economic environments. We remain focused on taking advantage of our tremendous long-term growth prospects while at the same time returning excess cash flows to our investors by way of share repurchases and dividends." 

Outlook for 2009

The uncertainty around the current economic environment and credit market conditions and their impact on travel patterns and hotel development activities makes it difficult to predict future results, particularly as it relates to underlying assumptions for RevPAR, new hotel franchise and relicensing sales and interest and investment income and expense.

The company's first quarter 2009 diluted EPS is expected to be $0.24. The company expects full year 2009 diluted EPS of $1.68. EBITDA for full-year 2009 are expected to be approximately $178 million. These estimates include the following assumptions:

  • The company expects net domestic unit growth of approximately 3.0% in 2009;
  • RevPAR is expected to decline approximately 12% for first quarter 2009 and decline approximately 10% for full-year 2009;
  • The effective royalty rate is expected to increase 3 basis points for full-year 2009;
  • All figures assume the existing share count and an effective tax rate of 36.5% for first quarter 2009 and 36.5% for full year 2009.
Use of Free Cash Flow

The company has consistently used its free cash flow (cash flow from operations less capital expenditures) to return value to shareholders, primarily through share repurchases and dividends.

For the year ended December 31, 2008 the company paid $43.1 million of cash dividends to shareholders. The current quarterly divided rate per common share is $0.185, subject to declaration by our board of directors.

During the fourth quarter of 2008, the company's board of directors authorized an increase under the company's existing stock repurchase program to acquire up to an additional five million shares of its outstanding common stock. For the year ended December 31, 2008, the company purchased approximately 2.2 million shares of its common stock at an average price of $24.56 for a total cost of $54.7 million. Subsequent to December 31, 2008 and through February 10, 2009, the Company repurchased 0.5 million shares at a total cost of $13.5 million at an average price of $26.97 per share. The company has authorization to purchase up to an additional 5.5 million shares under the share repurchase program. We expect to continue making repurchases in the open market and through privately negotiated transactions, subject to market and other conditions. No minimum number of share repurchases has been fixed. Since Choice announced its stock repurchase program on June 25, 1998, the company has repurchased 41.3 million shares of its common stock for a total cost of $964.1 million through February 10, 2009. Considering the effect of a two-for-one stock split in October 2005, the company has repurchased 74.3 million shares under the share repurchase program at an average price of $12.98 per share.

Our Board has authorized us to enter into programs which permit us to offer financing, investment and guaranty support to qualified franchisees to incent multi-unit franchise development in top markets. We expect to opportunistically deploy this capital over the next several years. Our annual investment in these programs is dependent on market and other conditions. In addition to these programs, the company expects to continue to return value to its shareholders through a combination of share repurchases and dividends, also subject to market and other conditions.
 
 

Choice Hotels International, Inc.          

Exhibit 1
Consolidated Statements of Income
(Unaudited)
 
 

                          Three Months Ended December 31,
                          -------------------------------
                                                Variance
                            2008      2007      $       %
                            ----      ----     ---     ---
    (In thousands, except per share amounts)

    REVENUES:

      Royalty fees       $59,284   $60,623   $(1,339)   (2%)
      Initial
       franchise and
       relicensing fees    6,729    11,907    (5,178)  (43%)
      Procurement
       services            3,498     3,680      (182)   (5%)
      Marketing and
       reservation        81,904    89,963    (8,059)   (9%)
      Hotel operations     1,253     1,207        46     4%
      Other                1,826     1,595       231    14%
                           -----     -----       ---    --
              Total
               revenues  154,494   168,975   (14,481)   (9%)

    OPERATING EXPENSES:

      Selling,
       general and
       administrative     35,580    27,855     7,725    28%
      Depreciation and
       amortization        2,019     2,227      (208)   (9%)
      Marketing and
       reservation        81,904    89,963    (8,059)   (9%)
      Hotel operations       894       839        55     7%
                             ---       ---        --     -
          Total
           operating
           expenses      120,397   120,884      (487)    0%

    Operating income      34,097    48,091   (13,994)  (29%)

    OTHER INCOME AND EXPENSES:
      Interest expense     2,245     4,087    (1,842)  (45%)
      Interest and
       other investment
       (income) loss       4,431     1,106     3,325   301%
      Equity in net
       income of
       affiliates           (476)     (393)      (83)   21%
                            ----      ----       ---    --
        Total other
         income and
         expenses, net     6,200     4,800     1,400    29%
                           -----     -----     -----    --

    Income before
     income taxes         27,897    43,291   (15,394)  (36%)
    Income taxes           9,186    15,344    (6,158)  (40%)
                           -----    ------    ------   ---
    Net income           $18,711   $27,947   $(9,236)  (33%)
                         =======   =======   =======   ===
 

    Weighted average
     shares outstanding-
     basic                61,166    62,086
                          ======    ======

    Weighted average
     shares outstanding-
     diluted              61,684    63,109
                          ======    ======

    Basic earnings per
     share                 $0.31     $0.45    $(0.14)  (31%)
                           =====     =====    ======   ===

    Diluted earnings
     per share             $0.30     $0.44    $(0.14)  (32%)
                           =====     =====    ======   ===
 

                          Twelve Months Ended December 31,
                          --------------------------------
                                                Variance
                            2008      2007      $       %
                            ----      ----     ---     ---
    (In thousands, except per share amounts)

    REVENUES:

      Royalty fees      $247,435  $236,346   $11,089     5%
      Initial
       franchise and
       relicensing fees   27,931    33,389    (5,458)  (16%)
      Procurement
       services           17,148    16,283       865     5%
      Marketing and
       reservation       336,477   316,827    19,650     6%
      Hotel operations     4,936     4,692       244     5%
      Other                7,753     7,957      (204)   (3%)
                           -----     -----      ----    --
              Total
               revenues  641,680   615,494    26,186     4%

    OPERATING EXPENSES:

      Selling,
       general and
       administrative    118,989   101,590    17,399    17%
      Depreciation and
       amortization        8,184     8,637      (453)   (5%)
      Marketing and
       reservation       336,477   316,827    19,650     6%
      Hotel operations     3,434     3,241       193     6%
                           -----     -----       ---    --
          Total
           operating
           expenses      467,084   430,295    36,789     9%

    Operating income     174,596   185,199   (10,603)   (6%)

    OTHER INCOME AND EXPENSES:
      Interest expense    10,932    14,293    (3,361)  (24%)
      Interest and
       other investment
       (income) loss       7,760    (1,750)    9,510  (543%)
      Equity in net
       income of
       affiliates         (1,414)   (1,230)     (184)   15%
                          ------    ------      ----    --
        Total other
         income and
         expenses, net    17,278    11,313     5,965    53%
                          ------    ------     -----    --

    Income before
     income taxes        157,318   173,886   (16,568)  (10%)
    Income taxes          57,107    62,585    (5,478)   (9%)
                          ------    ------    ------    --
    Net income          $100,211  $111,301  $(11,090)  (10%)
                        ========  ========  ========   ===
 

    Weighted average
     shares outstanding-
     basic                61,853    64,213
                          ======    ======

    Weighted average
     shares outstanding-
     diluted              62,521    65,331
                          ======    ======

    Basic earnings per
     share                 $1.62     $1.73    $(0.11)   (6%)
                           =====     =====    ======    ==

    Diluted earnings
     per share             $1.60     $1.70    $(0.10)   (6%)
                           =====     =====    ======    ==
 
 

    Choice Hotels International, Inc.          Exhibit 2
    Consolidated Balance Sheets
 

    (In thousands, except per
     share amounts)               December 31,  December 31,
                                      2008          2007
                                      ----          ----
                                   (Unaudited)

    ASSETS

    Cash and cash equivalents         $52,680       $46,377
    Accounts receivable, net           43,141        40,855
    Deferred income taxes               8,223         2,387
    Investments, employee
     benefit plans, at fair
     value                                  -         1,002
    Other current assets               16,172        15,330
                                       ------        ------
      Total current assets            120,216       105,951

    Fixed assets and
     intangibles, net                 138,867       141,679
    Receivable -- marketing fees       13,527         6,782
    Investments, employee
     benefit plans, at fair
     value                             25,360        33,488
    Other assets                       30,249        40,484
                                       ------        ------

        Total assets                 $328,219      $328,384
                                     --------      --------
 
 

    LIABILITIES AND SHAREHOLDERS' DEFICIT

    Accounts payable and
     accrued expenses                 $79,897       $96,195
    Deferred revenue                   47,004        48,660
    Deferred compensation &
     retirement plan obligations        6,960         1,002
    Other current liabilities           1,206         1,659
                                        -----         -----
      Total current liabilities       135,067       147,516

    Long-term debt                    284,400       272,378
    Deferred compensation &
     retirement plan
     obligations                       33,462        43,132
    Other liabilities                  12,960        22,419
                                       ------        ------

      Total liabilities               465,889       485,445
                                      -------       -------

    Common stock, $0.01 par
     value                                607           621
    Additional paid-in-capital         90,141        86,243
    Accumulated other
     comprehensive income (loss)       (3,472)          346
    Treasury stock, at cost          (835,186)     (798,110)
    Retained earnings                 610,240       553,839
                                      -------       -------
      Total shareholders'
       deficit                       (137,670)     (157,061)
                                     --------      --------

        Total liabilities and
         shareholders' deficit       $328,219      $328,384
                                     --------      --------
 
 

    Choice Hotels International, Inc.          Exhibit 3
    Consolidated Statements of Cash Flows
    (Unaudited)
 
 

                                                       Twelve Months
    (In thousands)                                   Ended December 31,
                                                     ------------------
                                                       2008      2007
                                                       ----      ----
    CASH FLOWS FROM OPERATING ACTIVITIES:

    Net income                                      $100,211  $111,301

    Adjustments to reconcile net income to net
     cash provided by operating activities:
      Depreciation and amortization                    8,184     8,637
      Provision for bad debts                          9,433       905
      Non-cash stock compensation and other charges   10,914    11,124
      Non-cash interest and other loss                 9,300        29
      Dividends received from equity
       method investments                              1,180     1,245
      Equity in net income of affiliates              (1,414)   (1,230)

    Changes in assets and liabilities, net
     of acquisitions:
      Receivables                                     (4,358)    1,056
      Receivable - marketing and
       reservation fees, net                          (7,578)   11,997
      Accounts payable                               (13,138)   13,053
      Accrued expenses                                (3,206)   (5,480)
      Income taxes payable/receivable                 (1,870)   (5,422)
      Deferred income taxes                            3,073    (7,649)
      Deferred revenue                                (1,549)    1,493
      Other assets                                    (1,046)   (2,554)
      Other liabilities                               (3,737)    7,161
                                                      ------     -----

     NET CASH PROVIDED BY OPERATING ACTIVITIES       104,399   145,666
                                                     -------   -------

    CASH FLOWS FROM INVESTING ACTIVITIES:

    Investment in property and equipment             (12,611)  (11,963)
    Acquisitions, net of cash acquired                     -      (343)
    Purchases of investments, employee
     benefit plans                                    (7,802)   (8,686)
    Proceeds from sales of investments,
     employee benefit plans                            7,819     6,049
    Issuance of notes receivable                      (7,410)   (7,395)
    Collections of notes receivable                      434     1,806
    Other items, net                                    (695)     (752)
                                                        ----      ----

     NET CASH USED IN INVESTING ACTIVITIES           (20,265)  (21,284)
                                                     -------   -------

    CASH FLOWS FROM FINANCING ACTIVITIES:

    Principal payments of long-term debt            (100,000)     (422)
    Net borrowings pursuant to revolving
     credit facility                                 112,000   100,199
    Excess tax benefits from stock-based
     compensation                                     10,135     6,209
    Purchase of treasury stock                       (63,732) (185,935)
    Dividends paid                                   (43,142)  (40,139)
    Proceeds from exercise of stock options            9,026     5,749
                                                       -----     -----

     NET CASH USED IN FINANCING ACTIVITIES           (75,713) (114,339)
                                                     -------  --------

    Net change in cash and cash equivalents            8,421    10,043
    Effect of foreign exchange rate changes on cash
     and cash equivalents                             (2,118)      493
    Cash and cash equivalents at
     beginning of period                              46,377    35,841
                                                      ------    ------

    CASH AND CASH EQUIVALENTS AT END OF PERIOD       $52,680   $46,377
                                                     =======   =======
 
 

                        CHOICE HOTELS INTERNATIONAL, INC.      EXHIBIT 4
                       SUPPLEMENTAL OPERATING INFORMATION
                              DOMESTIC HOTEL SYSTEM
                                   (UNAUDITED)
 

                                             For the Twelve Months Ended
                                                   December 31, 2008*
                                        ------------------------------------

                                           Average Daily
                                               Rate     Occupancy    RevPAR
                                               ----     ---------    ------

    Comfort Inn                               $79.84       60.1%     $48.01
    Comfort Suites                             89.49       61.3%      54.82
    Sleep                                      71.91       58.5%      42.10
                                               -----       ----       -----
      Midscale without Food & Beverage         80.90       60.2%      48.66
                                               -----       ----       -----

    Quality                                    71.42       52.0%      37.15
    Clarion                                    84.48       50.0%      42.21
                                               -----       ----       -----
      Midscale with Food & Beverage            74.18       51.6%      38.26
                                               -----       ----       -----

    Econo Lodge                                55.58       46.9%      26.05
    Rodeway                                    55.04       47.5%      26.16
                                               -----       ----       -----
      Economy                                  55.44       47.0%      26.08
                                               -----       ----       -----

    MainStay                                   73.72       64.2%      47.34
    Suburban                                   42.93       62.4%      26.80
                                               -----       ----       -----
      Extended Stay                            51.14       62.9%      32.17
                                               -----       ----       -----

    Total                                     $74.11       55.3%     $40.98
                                              ======       ====      ======
 

                                             For the Twelve Months Ended
                                                   December 31, 2007*
                                        ------------------------------------

                                          Average Daily
                                               Rate      Occupancy   RevPAR
                                               ----      ---------   ------

    Comfort Inn                               $77.14       63.1%     $48.70
    Comfort Suites                             87.23       65.5%      57.11
    Sleep                                      69.67       62.5%      43.52
                                               -----       ----       -----
      Midscale without Food & Beverage         78.23       63.5%      49.70
                                               -----       ----       -----

    Quality                                    70.30       54.2%      38.09
    Clarion                                    80.86       51.7%      41.79
                                               -----       ----       -----
      Midscale with Food & Beverage            72.74       53.6%      38.97
                                               -----       ----       -----

    Econo Lodge                                54.40       48.0%      26.10
    Rodeway                                    53.24       47.6%      25.32
                                               -----       ----       -----
      Economy                                  54.14       47.9%      25.93
                                               -----       ----       -----

    MainStay                                   70.04       68.5%      47.98
    Suburban                                   40.13       67.3%      27.01
                                               -----       ----       -----
      Extended Stay                            47.10       67.6%      31.83
                                               -----       ----       -----

    Total                                     $72.07       57.9%     $41.75
                                              ======       ====      ======
 

                                                       Change
                                                       ------

                                           Average Daily
                                                Rate       Occupancy   RevPAR
                                                ----       ---------   ------

    Comfort Inn                                  3.5%      (300) bps   (1.4%)
    Comfort Suites                               2.6%      (420) bps   (4.0%)
    Sleep                                        3.2%      (400) bps   (3.3%)
                                                 ---       ---------   ----
      Midscale without Food & Beverage           3.4%      (330) bps   (2.1%)
                                                 ---       ---------   ----

    Quality                                      1.6%      (220) bps   (2.5%)
    Clarion                                      4.5%      (170) bps    1.0%
                                                 ---       ---------    ---
      Midscale with Food & Beverage              2.0%      (200) bps   (1.8%)
                                                 ---       ---------   ----

    Econo Lodge                                  2.2%      (110) bps   (0.2%)
    Rodeway                                      3.4%       (10) bps    3.3%
                                                 ---        --------    ---
      Economy                                    2.4%       (90) bps    0.6%
                                                 ---        --------    ---

    MainStay                                     5.3%      (430) bps   (1.3%)
    Suburban                                     7.0%      (490) bps   (0.8%)
                                                 ---       ---------   ----
      Extended Stay                              8.6%      (470) bps    1.1%
                                                 ---       ---------    ---

    Total                                        2.8%      (260) bps   (1.8%)
                                                 ===       =========   ====
 

    * Operating statistics represent hotel operations from December through
      November.
 

                                            For the Three Months Ended
                                                 December 31, 2008*
                                        -----------------------------------

                                          Average Daily
                                               Rate      Occupancy    RevPAR
                                               ----      ---------    ------

    Comfort Inn                               $78.95        57.8%     $45.59
    Comfort Suites                             88.09        57.6%      50.73
    Sleep                                      71.48        55.1%      39.37
                                               -----        ----       -----
      Midscale without Food & Beverage         80.00        57.3%      45.85
                                               -----        ----       -----

    Quality                                    69.34        49.2%      34.08
    Clarion                                    82.53        46.7%      38.51
                                               -----        ----       -----
      Midscale with Food & Beverage            71.97        48.6%      35.00
                                               -----        ----       -----

    Econo Lodge                                55.36        45.5%      25.19
    Rodeway                                    53.68        44.4%      23.81
                                               -----        ----       -----
      Economy                                  54.90        45.2%      24.80
                                               -----        ----       -----

    MainStay                                   74.71        61.4%      45.88
    Suburban                                   44.08        57.1%      25.17
                                               -----        ----       -----
      Extended Stay                            52.65        58.2%      30.67
                                               -----        ----       -----

    Total                                     $72.97        52.6%     $38.38
                                              ======        ====      ======
 

                                            For the Three Months Ended
                                                  December 31, 2007*
                                        -----------------------------------

                                          Average Daily
                                               Rate     Occupancy     RevPAR
                                               ----     ---------     ------

    Comfort Inn                               $77.45        63.9%     $49.47
    Comfort Suites                             86.32        64.1%      55.29
    Sleep                                      70.10        61.4%      43.03
                                               -----        ----       -----
      Midscale without Food & Beverage         78.31        63.5%      49.76
                                               -----        ----       -----

    Quality                                    69.86        53.4%      37.28
    Clarion                                    82.27        52.3%      43.04
                                               -----        ----       -----
      Midscale with Food & Beverage            72.68        53.1%      38.61
                                               -----        ----       -----

    Econo Lodge                                54.33        47.7%      25.89
    Rodeway                                    52.17        46.7%      24.37
                                               -----        ----       -----
      Economy                                  53.82        47.4%      25.52
                                               -----        ----       -----

    MainStay                                   70.40        70.7%      49.77
    Suburban                                   40.65        64.6%      26.24
                                               -----        ----       -----
      Extended Stay                            48.50        66.1%      32.04
                                               -----        ----       -----

    Total                                     $72.16        57.6%     $41.58
                                              ======        ====      ======
 

                                                       Change
                                                       ------

                                           Average Daily
                                                Rate        Occupancy  RevPAR
                                                ----        ---------  ------

    Comfort Inn                                  1.9%       (610) bps   (7.8%)
    Comfort Suites                               2.1%       (650) bps   (8.2%)
    Sleep                                        2.0%       (630) bps   (8.5%)
                                                 ---        ---------   ----
      Midscale without Food & Beverage           2.2%       (620) bps   (7.9%)
                                                 ---        ---------   ----

    Quality                                     (0.7%)      (420) bps   (8.6%)
    Clarion                                      0.3%       (560) bps  (10.5%)
                                                 ---        ---------  -----
      Midscale with Food & Beverage             (1.0%)      (450) bps   (9.3%)
                                                ----        ---------   ----

    Econo Lodge                                  1.9%       (220) bps   (2.7%)
    Rodeway                                      2.9%       (230) bps   (2.3%)
                                                 ---        ---------   ----
      Economy                                    2.0%       (220) bps   (2.8%)
                                                 ---        ---------   ----

    MainStay                                     6.1%       (930) bps   (7.8%)
    Suburban                                     8.4%       (750) bps   (4.1%)
                                                 ---        ---------   ----
      Extended Stay                              8.6%       (790) bps   (4.3%)
                                                 ---        ---------   ----

    Total                                        1.1%       (500) bps   (7.7%)
                                                 ===        =========   ====
 

    * Operating statistics represent hotel operations from September through
      November.
 
 

                     For the Quarter Ended      For the Twelve Months Ended
                     ---------------------      ---------------------------
                    12/31/2008   12/31/2007      12/31/2008     12/31/2007

    System-wide
     effective
     royalty rate        4.23%        4.15%           4.20%          4.14%
 
 

                        CHOICE HOTELS INTERNATIONAL, INC.      EXHIBIT 5
                    SUPPLEMENTAL HOTEL AND ROOM SUPPLY DATA
                                  (UNAUDITED)
 

                                         December 31,     December 31,
                                             2008              2007
                                         ------------     ------------

                                       Hotels   Rooms   Hotels    Rooms
                                       ------   -----   ------    -----

    Comfort Inn                         1,462  114,573   1,434   112,042
    Comfort Suites                        541   42,152     481    37,358
    Sleep                                 365   26,867     346    25,728
                                          ---   ------     ---    ------
      Midscale without Food & Beverage  2,368  183,592   2,261   175,128
                                        -----  -------   -----   -------

    Quality                               908   85,055     828    79,276
    Clarion                               150   21,497     167    23,319
                                          ---   ------     ---    ------
      Midscale with Food & Beverage     1,058  106,552     995   102,595
                                        -----  -------     ---   -------

    Econo Lodge                           816   50,812     825    50,403
    Rodeway                               346   20,302     276    16,523
                                          ---   ------     ---    ------
      Economy                           1,162   71,114   1,101    66,926
                                        -----   ------   -----    ------

    MainStay                               35    2,694      30     2,258
    Suburban                               60    7,256      54     6,773
                                           --    -----      --     -----
      Extended Stay                        95    9,950      84     9,031
                                           --    -----      --     -----

    Ascend Collection                      21    1,353       -         -
    Cambria Suites                         12    1,323       4       459
                                           --    -----      --       ---

    Domestic Franchises                 4,716  373,884   4,445   354,139

    International Franchises            1,111   98,642   1,125    97,888
                                        -----   ------   -----    ------

    Total Franchises                    5,827  472,526   5,570   452,027
                                        =====  =======   =====   =======
 

                                                    Variance
                                                    --------

                                       Hotels   Rooms       %         %
                                       ------   -----      ---       ---

    Comfort Inn                            28    2,531     2.0%      2.3%
    Comfort Suites                         60    4,794    12.5%     12.8%
    Sleep                                  19    1,139     5.5%      4.4%
                                           --    -----     ---       ---
      Midscale without Food & Beverage    107    8,464     4.7%      4.8%
                                          ---    -----     ---       ---

    Quality                                80    5,779     9.7%      7.3%
    Clarion                               (17)  (1,822)  (10.2%)    (7.8%)
                                          ---   ------   -----      ----
      Midscale with Food & Beverage        63    3,957     6.3%      3.9%
                                           --    -----     ---       ---

    Econo Lodge                            (9)     409    (1.1%)     0.8%
    Rodeway                                70    3,779    25.4%     22.9%
                                           --    -----    ----      ----
      Economy                              61    4,188     5.5%      6.3%
                                           --    -----     ---       ---

    MainStay                                5      436    16.7%     19.3%
    Suburban                                6      483    11.1%      7.1%
                                           --      ---    ----       ---
      Extended Stay                        11      919    13.1%     10.2%
                                           --      ---    ----      ----

    Ascend Collection                      21    1,353    NM        NM
    Cambria Suites                          8      864   200.0%    188.2%
                                           --      ---   -----     -----

    Domestic Franchises                   271   19,745     6.1%      5.6%

    International Franchises              (14)     754    (1.2%)     0.8%
                                          ---      ---    ----       ---

    Total Franchises                      257   20,499     4.6%      4.5%
                                          ===   ======     ===       ===
 
 

                       CHOICE HOTELS INTERNATIONAL, INC.       EXHIBIT 6
                       SUPPLEMENTAL INFORMATION BY BRAND
              DEVELOPMENT RESULTS -- DOMESTIC NEW HOTEL CONTRACTS
                                  (UNAUDITED)
 

                                          For the Twelve Months Ended
                                                December 31, 2008
                                          ---------------------------

                                            New
                                       Construction   Conversion   Total
                                       ------------   ----------   -----

    Comfort Inn                                  48           58     106
    Comfort Suites                               85            3      88
    Sleep                                        72            4      76
                                                 --           --      --
      Midscale without Food & Beverage          205           65     270
                                                ---           --     ---

    Quality                                       5          147     152
    Clarion                                       7           42      49
                                                 --           --      --
      Midscale with Food & Beverage              12          189     201
                                                 --          ---     ---

    Econo Lodge                                   4           83      87
    Rodeway                                       3           99     102
                                                 --           --     ---
      Economy                                     7          182     189
                                                 --          ---     ---

    MainStay                                     12            -      12
    Suburban                                      8            -       8
                                                 --           --      --
      Extended Stay                              20            -      20
                                                 --           --      --

    Ascend Collection                             1            1       2
    Cambria Suites                               16            -      16
                                                 --           --      --

    Total Domestic System                       261          437     698
                                                ===          ===     ===
 

                                         For the Twelve Months Ended
                                               December 31, 2007
                                         ---------------------------

                                            New
                                       Construction   Conversion   Total
                                       ------------   ----------   -----

    Comfort Inn                                  48           62     110
    Comfort Suites                              114            4     118
    Sleep                                        71            1      72
                                                 --           --      --
      Midscale without Food & Beverage          233           67     300
                                                ---           --     ---

    Quality                                      11          153     164
    Clarion                                       6           42      48
                                                 --           --      --
      Midscale with Food & Beverage              17          195     212
                                                 --          ---     ---

    Econo Lodge                                   3           77      80
    Rodeway                                       2           99     101
                                                 --           --     ---
      Economy                                     5          176     181
                                                 --          ---     ---

    MainStay                                     22            2      24
    Suburban                                     21            3      24
                                                 --           --      --
      Extended Stay                              43            5      48
                                                 --           --      --

    Ascend Collection                             -            -       -
    Cambria Suites                               29            -      29
                                                 --           --      --

    Total Domestic System                       327          443     770
                                                ===          ===     ===
 

                                                    % Change
                                                    --------

                                            New
                                       Construction   Conversion   Total
                                       ------------   ----------   -----

    Comfort Inn                                   0%          (6%)    (4%)
    Comfort Suites                              (25%)        (25%)   (25%)
    Sleep                                         1%         300%      6%
                                                 --          ---      --
      Midscale without Food & Beverage          (12%)         (3%)   (10%)
                                                ---           --     ---

    Quality                                     (55%)         (4%)    (7%)
    Clarion                                      17%           0%      2%
                                                 --           --      --
      Midscale with Food & Beverage             (29%)         (3%)    (5%)
                                                ---           --      --

    Econo Lodge                                  33%           8%      9%
    Rodeway                                      50%           0%      1%
                                                 --           --      --
      Economy                                    40%           3%      4%
                                                 --           --      --

    MainStay                                    (45%)       (100%)   (50%)
    Suburban                                    (62%)       (100%)   (67%)
                                                ---         ----     ---
      Extended Stay                             (53%)       (100%)   (58%)
                                                ---         ----     ---

    Ascend Collection                       NM            NM         NM
    Cambria Suites                              (45%)     NM         (45%)
                                                ---       --         ---

    Total Domestic System                       (20%)         (1%)    (9%)
                                                ===           ==      ==
 

                                           For the Three Months Ended
                                                December 31, 2008
                                           --------------------------

                                            New
                                       Construction   Conversion   Total
                                       ------------   ----------   -----

    Comfort Inn                                  15           17      32
    Comfort Suites                               20            -      20
    Sleep                                        25            1      26
                                                 --           --      --
      Midscale without Food & Beverage           60           18      78
                                                 --           --      --

    Quality                                       1           39      40
    Clarion                                       1           14      15
                                                 --           --      --
      Midscale with Food & Beverage               2           53      55
                                                 --           --      --

    Econo Lodge                                   1           28      29
    Rodeway                                       1           34      35
                                                 --           --      --
      Economy                                     2           62      64
                                                 --           --      --

    MainStay                                      5            -       5
    Suburban                                      -            -       -
                                                 --           --      --
      Extended Stay                               5            -       5
                                                 --           --      --

    Ascend Collection                             1            -       1
    Cambria Suites                                4            -       4
                                                 --           --      --

    Total Domestic System                        74          133     207
                                                 ==          ===     ===
 

                                           For the Three Months Ended
                                                December 31, 2007
                                           --------------------------

                                            New
                                       Construction   Conversion   Total
                                       ------------   ----------   -----

    Comfort Inn                                  22           30      52
    Comfort Suites                               36            -      36
    Sleep                                        38            -      38
                                                 --           --      --
      Midscale without Food & Beverage           96           30     126
                                                 --           --     ---

    Quality                                       4           57      61
    Clarion                                       1           14      15
                                                 --           --      --
      Midscale with Food & Beverage               5           71      76
                                                 --           --      --

    Econo Lodge                                   -           27      27
    Rodeway                                       -           37      37
                                                 --           --      --
      Economy                                     -           64      64
                                                 --           --      --

    MainStay                                     12            1      13
    Suburban                                     11            -      11
                                                 --           --      --
      Extended Stay                              23            1      24
                                                 --           --      --

    Ascend Collection                             -            -       -
    Cambria Suites                               11            -      11
                                                 --           --      --

    Total Domestic System                       135          166     301
                                                ===          ===     ===
 

                                                    % Change
                                                    --------

                                            New
                                       Construction   Conversion   Total
                                       ------------   ----------   -----

    Comfort Inn                                 (32%)        (43%)   (38%)
    Comfort Suites                              (44%)     NM         (44%)
    Sleep                                       (34%)     NM         (32%)
                                                ---       --         ---
      Midscale without Food & Beverage          (38%)        (40%)   (38%)
                                                ---          ---     ---

    Quality                                     (75%)        (32%)   (34%)
    Clarion                                       0%           0%      0%
                                                 --           --      --
      Midscale with Food & Beverage             (60%)        (25%)   (28%)
                                                ---          ---     ---

    Econo Lodge                             NM                 4%      7%
    Rodeway                                 NM                (8%)    (5%)
                                            --                --      --
      Economy                               NM                (3%)     0%
                                            --                --      --

    MainStay                                    (58%)       (100%)   (62%)
    Suburban                                   (100%)     NM        (100%)
                                               ----       --        ----
      Extended Stay                             (78%)       (100%)   (79%)
                                                ---         ----     ---

    Ascend Collection                       NM            NM         NM
    Cambria Suites                              (64%)     NM         (64%)
                                                ---       --         ---

    Total Domestic System                       (45%)        (20%)   (31%)
                                                ===          ===     ===
 
 
 

                     CHOICE HOTELS INTERNATIONAL, INC.         Exhibit 7
          DOMESTIC HOTEL PIPELINE OF HOTELS UNDER CONSTRUCTION,
              AWAITING CONVERSION OR APPROVED FOR DEVELOPMENT
                              (UNAUDITED)

    A hotel in the domestic pipeline does not always result in an
    open and operating hotel due to various factors.
 

                                              December 31, 2008
                                                    Units
                                                    -----
                                                       New
                                       Conversion  Construction Total
                                       ---------- ------------- -----

    Comfort Inn                                51           125   176
    Comfort Suites                              3           279   282
    Sleep Inn                                   2           157   159
                                               --           ---   ---
         Midscale without Food &
          Beverage                             56           561   617
                                               --           ---   ---

    Quality                                    69            14    83
    Clarion                                    36             9    45
                                               --            --    --
         Midscale with Food & Beverage        105            23   128
                                              ---            --   ---

    Econo Lodge                                45             5    50
    Rodeway                                    58             2    60
                                               --            --    --
         Economy                              103             7   110
                                              ---            --   ---

    MainStay                                    -            38    38
    Suburban                                    -            34    34
                                               --            --    --
         Extended Stay                          -            72    72
                                               --            --    --

    Ascend Collection                           -             1     1
    Cambria Suites                              -            59    59
                                               --            --    --

    Total                                     264           723   987
                                              ===           ===   ===
 

                                              December 31, 2007
                                                    Units
                                                    -----
                                                       New
                                       Conversion  Construction Total
                                       ---------- ------------- -----

    Comfort Inn                                54           135   189
    Comfort Suites                              1           278   279
    Sleep Inn                                   -           138   138
                                               --           ---   ---
         Midscale without Food &
          Beverage                             55           551   606
                                               --           ---   ---

    Quality                                    71            15    86
    Clarion                                    30             7    37
                                               --            --    --
         Midscale with Food & Beverage        101            22   123
                                              ---            --   ---

    Econo Lodge                                46             3    49
    Rodeway                                    68             3    71
                                               --            --    --
         Economy                              114             6   120
                                              ---            --   ---

    MainStay                                    2            46    48
    Suburban                                    4            40    44
                                               --            --    --
         Extended Stay                          6            86    92
                                               --            --    --

    Ascend Collection                           -             -     -
    Cambria Suites                              -            63    63
                                               --            --    --

    Total                                     276           728 1,004
                                              ===           === =====
 

                                                 Variance
                                                 --------

                                 Conversion   New Construction     Total
                                 ----------   ----------------     -----
                                Units    %      Units     %     Units   %
                                -----   ---     -----    ---    -----  ---

    Comfort Inn                    (3)   (6%)      (10)    (7%)   (13)  (7%)
    Comfort Suites                  2   200%         1      0%      3    1%
    Sleep Inn                       2   NM          19     14%     21   15%
                                   --   --          --     --      --   --
         Midscale without Food &
          Beverage                  1     2%        10      2%     11    2%
                                   --    --         --     --      --   --

    Quality                        (2)   (3%)       (1)    (7%)    (3)  (3%)
    Clarion                         6    20%         2     29%      8   22%
                                   --    --         --     --      --   --
         Midscale with Food &
          Beverage                  4     4%         1      5%      5    4%
                                   --    --         --     --      --   --

    Econo Lodge                    (1)   (2%)        2     67%      1    2%
    Rodeway                       (10)  (15%)       (1)   (33%)   (11) (15%)
                                  ---   ---         --    ---     ---  ---
         Economy                  (11)  (10%)        1     17%    (10)  (8%)
                                  ---   ---         --     --     ---   --

    MainStay                       (2) (100%)       (8)   (17%)   (10) (21%)
    Suburban                       (4) (100%)       (6)   (15%)   (10) (23%)
                                   --  ----         --    ---     ---  ---
         Extended Stay             (6) (100%)      (14)   (16%)   (20) (22%)
                                   --  ----        ---    ---     ---  ---

    Ascend Collection               -   NM           1    NM        1   NM
    Cambria Suites                  -   NM          (4)    (6%)    (4)  (6%)
                                   --   --          --     --      --   --

    Total                         (12)   (4%)       (5)    (1%)   (17)  (2%)
                                  ===    ==         ==     ==     ===   ==
 
 

                       CHOICE HOTELS INTERNATIONAL, INC.       EXHIBIT 8
                 SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION
                                (UNAUDITED)

    CALCULATION OF FRANCHISING REVENUES AND ADJUSTED FRANCHISING MARGINS

                                          Three Months        Twelve Months
                                             Ended               Ended
    (dollar amounts in thousands)         December 31,        December 31,
                                         --------------      --------------

                                         2008      2007      2008      2007
                                         ----      ----      ----      ----
      Franchising Revenues:

      Total Revenues                 $154,494  $168,975  $641,680  $615,494
      Adjustments:
           Marketing and
            reservation revenues      (81,904)  (89,963) (336,477) (316,827)
           Hotel operations            (1,253)   (1,207)   (4,936)   (4,692)
                                       ------    ------    ------    ------
      Franchising Revenues            $71,337   $77,805  $300,267  $293,975
                                      -------   -------  --------  --------

      Franchising Margins:

      Operating Margin:

      Total Revenues                 $154,494  $168,975  $641,680  $615,494
      Operating Income                $34,097   $48,091  $174,596  $185,199
                                      -------   -------  --------  --------
           Operating Margin              22.1%     28.5%     27.2%     30.1%
                                         ----      ----      ----      ----

      Adjusted Franchising Margin:

      Franchising Revenues            $71,337   $77,805  $300,267  $293,975

      Operating Income                $34,097   $48,091  $174,596  $185,199
      Acceleration of management
       succession plan benefits           500         -     6,605         -
      Employee termination benefits     2,731       141     3,537     4,250
      Loan reserves related to
       impaired notes receivable        7,555         -     7,555         -
      Hotel operations                   (359)     (368)   (1,502)   (1,451)
                                         ----      ----    ------    ------
                                      $44,524   $47,864  $190,791  $187,998
                                      -------   -------  --------  --------

                                         ----      ----      ----      ----
           Adjusted Franchising Margins  62.4%     61.5%     63.5%     64.0%
                                         ----      ----      ----      ----
 

    CALCULATION OF ADJUSTED NET INCOME AND ADJUSTED DILUTED EARNINGS
     PER SHARE (EPS)

                                       Three Months    Twelve Months
    (In thousands, except                  Ended            Ended
     per share amounts)                December 31,     December 31,
                                      --------------   --------------

                                        2008    2007     2008     2007
                                        ----    ----     ----     ----

    Net Income                       $18,711 $27,947 $100,211 $111,301
    Adjustments:
      Acceleration of management
       succession plan benefits          313       -    4,135        -
      Employee termination benefits    1,709      89    2,214    2,660
      Loan reserves related to
       impaired notes receivable       4,729       -    4,729        -
                                       -----      --    -----       --
    Adjusted Net Income              $25,462 $28,036 $111,289 $113,961
                                     ------- ------- -------- --------

    Weighted average shares
     outstanding-diluted              61,684  63,109   62,521   65,331

    Diluted Earnings Per Share         $0.30   $0.44    $1.60    $1.70
    Adjustments:
      Acceleration of management
       succession plan                     -       -     0.07        -
      Employee termination benefits     0.03       -     0.03     0.04
      Loan reserves related to
       impaired notes receivable        0.08       -     0.08        -
                                        ----      --     ----       --
    Adjusted Diluted Earnings
     Per Share (EPS)                   $0.41   $0.44    $1.78    $1.74
                                       -----   -----    -----    -----
 

    Adjusted EBITDA Reconciliation

    (in millions)

                                         Year Ended   Year Ended
                           Q4      Q4   December 31, December 31, Full-Year
                          2008    2007      2008         2007        2009
                        Actuals Actuals    Actuals      Actuals    Outlook
                        ------- ------- ------------ ------------ ---------

      Operating Income
       (per GAAP)         $34.1   $48.1       $174.6       $185.2    $169.2
      Acceleration
       of management
       succession plan      0.5       -          6.6            -        $-
      Employee termination
       benefits             2.7     0.1          3.5          4.3        $-
      Loan reserves
       related to
       impaired notes
       receivable           7.6       -          7.6            -        $-
      Depreciation
       and amortization     2.0     2.2          8.2          8.6       8.8
                            ---     ---          ---          ---       ---
      Adjusted Earnings
       before interest,
       taxes, depreciation
       and amortization
       (non-GAAP)         $46.9   $50.4       $200.5       $198.1    $178.0
                          =====   =====       ======       ======    ======


 
 

   About Choice Hotels

Choice Hotels International franchises more than 5,800 hotels, representing more than 470,000 rooms, in the United States and more than 30 countries and territories. As of December 31, 2008, 987 hotels are under construction, awaiting conversion or approved for development in the United States, representing 78,915 rooms, and an additional 121 hotels, representing 10,190 rooms, are under construction, awaiting conversion or approved for development in more than 15 countries and territories. The company's Comfort Inn, Comfort Suites, Quality, Sleep Inn, Clarion, Cambria Suites, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge and Rodeway Inn brands serve guests worldwide. In addition, via its Ascend Collection membership program, travelers in the United States, Canada and the Caribbean have upscale lodging options at historic, boutique and unique hotels. Additional corporate information may be found on the Choice Hotels Web site, which may be accessed at www.choicehotels.com.

Forward-Looking Statements 

Certain matters discussed in this press release constitute forward-looking statements within the meaning of the federal securities law. Generally, our use of words such as "expect," "estimate," "believe," "anticipate," "will," "forecast," "plan," project," "assume" or similar words of futurity identify statements that are forward-looking and that we intend to be included within the Safe Harbor protections provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements are based on management's current beliefs, assumptions and expectations regarding future events, which in turn are based on information currently available to management. Such statements may relate to projections of the company's revenue, earnings and other financial and operational measures, company debt levels, payment of stock dividends, and future operations, among other matters. We caution you not to place undue reliance on any such forward-looking statements. Forward-looking statements do not guarantee future performance and involve known and unknown risks, uncertainties and other factors.

Several factors could cause actual results, performance or achievements of the company to differ materially from those expressed in or contemplated by the forward-looking statements. Such risks include, but are not limited to, changes to general, domestic and foreign economic conditions; operating risks common in the lodging and franchising industries; changes to the desirability of our brands as viewed by hotel operators and customers; changes to the terms or termination of our contracts with franchisees; our ability to keep pace with improvements in technology utilized for reservations systems and other operating systems; fluctuations in the supply and demand for hotels rooms; and our ability to manage effectively our indebtedness. These and other risk factors are discussed in detail in the Risk Factors section of the company's Form 10-K for the year ended December 31, 2007, filed with the Securities and Exchange Commission on February 29, 2008. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Statement Concerning Non-GAAP Financial Measurements

Adjusted diluted EPS, adjusted EBITDA, franchising revenues and adjusted franchising margins are non-GAAP financial measurements. This information should not be considered as an alternative to any measure of performance as promulgated under accounting principles generally accepted in the United States (GAAP), such as diluted earnings per share, operating income, total revenues and operating margins. The company's calculation of these measurements may be different from the calculations used by other companies and therefore comparability may be limited. The company has included an exhibit accompanying this release that reconciles these measures to the comparable GAAP measurement. We discuss management's reasons for reporting these non-GAAP measures below.

Earnings Before Interest, Taxes, Depreciation and Amortization: EBITDA reflects earnings excluding the impact of interest expense, tax expense, depreciation and amortization. Our management considers EBITDA to be an indicator of operating performance because it can be used to measure our ability to service debt, fund capital expenditures, and expand our business. EBITDA is a commonly used measure of performance in our industry. In addition, it is used by analysts, lenders, investors and others, as well as by us, to facilitate comparisons between the Company and its competitors because it excludes certain items that can vary widely across different industries or among companies within the same industry. 

Franchising Revenues and Margins: The Company reports franchising revenues and margins which exclude marketing and reservations revenues and hotel operations. Marketing and reservation activities are excluded from revenues and operating margins since the Company is contractually required by its franchise agreements to use these fees collected for marketing and reservation activities. Cumulative reservation and marketing fees not expended are recorded as a payable on the Company's financial statements and are carried over to the next fiscal year and expended in accordance with the franchise agreements. Cumulative marketing and reservation expenditures in excess of fees collected for marketing and reservation activities are recorded as a receivable on the Company's financial statements. In addition, the Company has the contractual authority to require that the franchisees in the system at any given point repay the Company for any deficits related to marketing and reservation activities. Hotel operations are excluded since they do not reflect the most accurate measure of the Company's core franchising business. These non-GAAP measures are a commonly used measure of performance in our industry and facilitate comparisons between the Company and its competitors.

Adjusted EBITDA, Adjusted Franchising Margins and Adjusted Diluted EPS: The Company's management also uses Adjusted EBITDA, Adjusted Franchising Margins and Adjusted Diluted EPS which exclude the impact of the acceleration of the Company's management succession plan, employee termination benefits, and additional reserves recorded on impaired notes receivable in the year ended December 31, 2008 and the impact of termination benefits incurred in the year ended December 31, 2007. The Company utilizes these non-GAAP measures to enable investors to perform meaningful comparisons of past, present and future operating results and as a means to emphasize the results of on-going operations.

Cambria Suites, Comfort Inn, Comfort Suites, Quality, Clarion, Sleep Inn, MainStay Suites, Suburban Extended Stay Hotel, Econo Lodge, and Rodeway Inn are proprietary trademarks and service marks of Choice Hotels International, Inc.
2008 Choice Hotels International, Inc. All rights reserved.

.
Contact:

Choice Hotels International, Inc.
http://www.choicehotels.com
 

.
.
Also See: Choice Hotels International Inc. Reports a 6.5% Decline in Third Qtr Net Income of $35.9 million Compared with $38.4 million a Year Earlier; Higher Operating Costs Wipes Away a 9.2% Increase in Revenues / October 2008
Hotel Franchiser Choice Hotels Reports 2nd Qtr 2008 Net Income of $27.0 million, Down from $28.6 million in the Same Quarter a Year Ago; RevPAR Expected to Decline Nearly 4% in 3rd Quarter / July 2008
.

To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch
Home | Welcome| Hospitality News | Classifieds| One-on-One |
Viewpoint Forum | Industry Resources | Press Releases
Please contact Hotel.Onlinewith your comments and suggestions.